May 15, 2017
The days are gone when signs of vital economic growth were clouds of smoke billowing into the air from manufacturing and steel plants.
There is still isolated manufacturing along the Cuyahoga River, but entrepreneurs are looking at new ways to breath new economic activity throughout Cleveland.
They are doing it in a bold manner but quietly behind the paned windows and brick walls of Cleveland’s former factory buildings.
We’re talking coffee. And lots of it. From Collinwood to Hingetown, those craving a cup of caffeine have a locally owned coffee shop nearby as an option.
In the past five years, Cleveland’s food scene has exploded, ranking it as one of the top food cities in the country. Breweries quickly followed, earning Cleveland a new reputation to replace what was lost when manufacturing jobs left the region.
Following beer’s example is coffee.
In the last couple of years, there’s been an explosion of micro-roasters, slowing developing Cleveland’s coffee scene.
“We're seeing pretty strong growth across the market. It's a nuanced thing, though,” said Christopher Feran, the Coffee Director at Phoenix Coffee and a coffee consultant, who has worked in the coffee industry for almost ten years.
Coffee shops and micro-roasters are opening up shops throughout Cleveland, alongside the dozen, big and small, already established businesses. Phoenix Coffee announced on May 8 that its fifth café is coming to the Warehouse District in the summer. Nearby in the East Bank Flats, Six Shooter’s is extending its location on Waterloo Road to a small café at their micro-roasters on May 20.
“Just because we're seeing more shops and roasters opening, doesn't necessarily mean that everyone is doing well, but it does fit a larger national trend of growth in the specialty segment which is tied directly to a growth in the millennial population in Cleveland,” Feran said. “Around the Rustbelt there is some growth in Detroit and Pittsburgh, as well.”
Cleveland has experienced millennial migration since 2008 because of low rent compared to cities like Boston, Los Angeles and New York, according to “Fifth Migration: A Study of Cleveland Millennials.”
When Rising Star started in 2012, there were not many roasters around; Now there are more than a dozen third wave coffee shops and roasters scattered throughout the city, usually in former factory buildings, repurposed and renovated for much less than other cities.
Brandon Riggs, the coffee director at Rising Star, explains how the availability and discussion of coffee at local coffee shops allows customers to make a connection to the cup of coffee they are drinking, even though they may be thousands of miles away from a farmer.
“I think education is a part of the growth among the independent coffee roasters. The old way of thinking of coffee roasting is ‘it’s a big secret,’” said Riggs. “Now customers can see how their beans are roasted on a local level. It lifts the veil of the secret roasting process.”
Robert Stockham, general manager of Rising Star, has seen growth in over the last three years.
From 2014 to 2015, sales nearly doubled. In 2016, sales increased by 17 percent.
“For the wholesale side, we have seen sales grow at a slower pace. That is, if you don't calculate in the sales to our own cafes,” explained Stockham.
From 2015 to 2016, wholesale grew by 6.25 percent. At the end of this year, Stockham says they are on track for 5.8 percent growth.
Peter Brown, of Six Shooter Coffee, has seen a growth in wholesaling since opening his first roasting facility in 2015. Brown imports 20,000 pounds of beans per year. In 2015, he sold 40 pounds of coffee per week at wholesale but has since increased that to around 300 pounds per week. At Six Shooter Coffee, the café uses anywhere from 90 to 100 pounds per week.
Cleveland’s Single-Cup Origin
Cleveland’s history in coffee isn’t a new phenomenon. It’s an industry that is more established than surrounding cities, dating back to the 1970’s when Arabica Coffee opened several shops throughout Cleveland and around Northeast Ohio. The first Starbucks store didn’t open until March 30, 1971 in Seattle.
Carl Jones was the founder of the Phoenix in 1990; before Phoenix he started Arabica. It was a chain that was bought by a restaurant licensing chain and was one of the first roasting coffee companies in Cleveland and even the region, before Starbucks rose as the giant coffee conglomerate it is today.
“We have a pretty developed coffee scene compared to other similarly developed sized cities,” said Feran. “The number of shops doing interesting things and the number of roasters popping up definitely changed the game. It was cool to be part of that changed. It’s forced us to pivot a lot and look at what we do.”
Will the Bean Burst?
In the last several years, Cleveland’s food processing industry and restaurant scene have exploded, leaving the obvious questions unanswered: How many breweries, restaurants and coffees shops are too many for the region? Will bean burst?
Michael Goldberg, an assistant professor in the Weatherhead School of Management at Case Western Reserve University who specializes in entrepreneurship and growth in tech companies, said Cleveland is a hotspot for entrepreneurs to experiment with different ventures because of the low cost of real estate.
“There’s a greater appetite for entrepreneurs here than I’ve seen in any other city, and I’ve been to a lot,” said Goldberg. “We are seeing it with tech startups companies here, Cleveland’s economy is transitioning from a manufacturing economy to a more service-based market.”
When asked about the coffee bubble or even the brewery bubble bursting anytime soon, he said if businesses continue to open, there’s a market. When businesses start to close or buyouts happen, that’s when a shift will happen.
Among the coffee entrepreneurs News 5 spoke with some expressed mixed feelings about whether Cleveland is too saturated with coffee roasters and shops.
“I think we are in a little bit of a bubble. I think a lot of the roasters that popped up won’t last. Roasting is a lot different than running a store. Operationally it’s a lot different, you have to make very large purchases because you have to reach your economy of scale in order to make any money at all,” said Feran of Phoenix Coffee
Others are more optimistic about the room for incoming coffee shops in Cleveland.
Stockham has been in the business for 30 years. Before coming to Cleveland he was heavily involved in the coffee market in Seattle and Portland. He has seen how the market in Cleveland is on an upward trajectory.
“I think Cleveland will be the coffee capital of the Midwest. I think we have a lot of talent. I really do believe it,” said Stockham. “It’s affordable in a way that no other Rust Belt city is. We have so many amenities and people are coming back to Cleveland and new people are moving here. I’m an example of that. People can still afford to experiment to here and afford to put a roaster in their backyard or an old building.”